Idaho: Plant Innovation Seeds Now For Tomorrow’s Growth

Posted by: Mark Solon

As I was reading one of the Idaho Statesman’s recent articles about Micron’s latest round of layoffs, I was struck by the reaction of one of our legislators. This particular gentleman was quoted as saying “It’s a shock. I’ve been through three or four of these. You think you see things that show we’re hitting the bottom. Then two days later, the bottom falls out again.” I’ve never met this legislator and my intent is not to single him out. I’m sure that he, like most of us are devastated for the thousands families affected by these layoffs and I’ve got a tremendous amount of respect for anyone who devotes a significant portion of their life to public service. However, I know hundreds of people working in the tech sector in Idaho and I promise you, not one of them would say they are “shocked” by this news. Saddened like you and I, yes. Shocked? No way. People in Idaho’s tech sector have been expecting and talking about this day for years.

If anyone is shocked by this news than they fail to grasp that Micron stopped being an innovative technology company a long time ago. What they became is an innovative manufacturing company. Micron is laying off 2000 more workers for the same reason that you no longer have a neighborhood drug store, hardware store, or corner market and now buy the products they sold from Rite-Aid, Home Depot and Wallmart. Micron is a manufacturer of commodity products like toothpaste, screwdrivers and blue jeans. The winners are the ones who can produce and sell it the cheapest. Given that, why in the world would Micron hire an engineer in Boise, ID for $70,000 a year when he can hire that same engineer in China for $7,000? Whatever you do, don’t fool yourself into thinking our US engineers are better trained, it’s not true. China is building top-notch engineering schools at a breakneck pace. Personally, I think it’s remarkable that Micron thrived as long as they did while continuing to manufacture in the US and Steve Appleton probably doesn’t get the credit he deserves for their long run at the top.

If Idaho’s lawmakers want to return to (and stay in) the heyday of higher paying technology jobs, I believe that the best way to get there is through significant investment in math & sciences, from K-12 up through PhD programs at our universities. In fact, this week Forbes published a compelling article on the importance of Universities (particularly their engineering schools) in the innovation continuum. Recruiting more tech companies is a band-aid, not a cure. When a forest burns down, you don’t plant mature trees to replace it. While there might be exceptions (I don’t know of any), every town where multiple technology companies have been started and flourished, there have been world-class universities or corporate R&D labs to fuel innovation and create an educated tech workforce. There are no shortcuts. Long before venture capitalists arrived and funded technology and biotech companies in Silicon Valley, Boston and Research Triangle Park (known as three of the hubs of innovation in our country), the research labs at MIT, Stanford and Duke/North Carolina were the benefactors of huge capital investments to fund world-class research and development. You don’t even have to look to those larger cities to see how this type of investment has reaped great rewards. I spend a great deal of time in Utah where they’ve been investing millions of dollars a year into R&D in their universities for many years. Last year, the University of Utah alone spun out 17 high tech companies, 2nd in the nation!

What can we do? In 2006 Utah founded USTAR, an initiative intended to foster research at state universities and promote the creation of new companies to commercialize that research. USTAR was launched with a one-time investment of $3.35 million and ongoing funding of $4 million annually. University of Utah and the other Utah schools have been the beneficiary of the investment Utah has made in its future. The challenge for our lawmakers who care such a great deal about Idaho is that it will take a great deal of courage to make these investments in our future when they might not be in office when the payoff comes. There will be no immediate payback, no progress to show when it’s time to campaign again in a couple of years.

Given the current enviornment, I’m sure many would say “How will we pay for this?” The only answer I have is that we can’t afford not to. Perhaps we should go back and see how the land grant system was funded (which gave us The University of Idaho). Or how the GI bill was funded. The short answer is it was funded with capital. It was an investment made in the future with no short-term payback expected. Generations have long lived off the dividends being realized from these original investments. It is, however, our turn now to invest in the future. While this might sound daunting, it is definitely attainable and we have some great assets to work with. For example, I’m confident that we can create a world-class Center of Excellence here in Idaho in materials science that will result in great tech startups over time. BSU’s Engineering School has a burgeoning materials science program and many of the engineers at Micron have core competencies in this area. Furthermore, materials science expertise lends itself to Clean Tech innovation, an area that will certainly be around for a while. I’d be pleased to sit down with any of our lawmakers to talk in more detail about how we can invest a small amount today for tremendous rewards down the road.

To date, our state’s approach to this challenge has been to create an economic primordial ooze: offer reasonably low tax rates, relatively little regulation, and a nice quality of life and maybe, just maybe (if we wait a couple of billion years), it will spawn a significant technology company or two.

Well, it hasn’t been enough. It won’t be enough.

Like any other investor, the state (as well as local municipalities) must assume some risk in order to enjoy the rewards. Until then, here we are…

Mark,
Good start!!! However it is not the whole solution. I don’t believe that just giving higher ed money is the answer. If you dig down into USTAR or any other successful entity like USTAR they actually started by making the universities accountable and setting the expectations for a return on investment. And I don’t mean the expectations we currently use in Idaho. Our universities are currently receiving more than $100 million a year for research (total research for the state is more than one BILLION. What do we get for that? Less than a handful of startups in total and not even enough money to run a decent tech transfer office. what percentage of our kids entering college complete in four years? Or ever? Our academic R&D funded by industry has dropped by 25% over the last four years. Why would that be? Micron and other Idaho companies spent more R&D money at universities outside of Idaho for the last three years than they did in Idaho. We have one of the lowest rates of Masters and PhDs per age group of any state in the Union. Why? Accountability and expectations. Brice is absolutely right and giving education more money to do more of the same is not the whole answer.

You’re covering alot of different issues here Rick but on your core statement, I couldn’t agree with you more. Money alone is not the answer. Given the scarcity of it, it needs to be very targeted. Very little of that $100mm goes to the engineering disciplines that create the educated workforce we need and also spurs commercialization.

At the risk of being self-serving something that I think is needed is for the technological community in Idaho become more of a political force — which means money. Money to get and keep the sort of legislators you want.

To quote yourself: “Given the current enviornment, I’m sure many would say “How will we pay for this?” The only answer I have is that we can’t afford not to. The short answer is it was funded with capital.”

Idaho is a *cheap* place to invest in legislative candidates. A donation that wouldn’t go far at all in a place like California could make or break a candidate here in Idaho. *Great* ROI.

You’re right Sharon. Other than Micron & HP (ie, big taxpayers), the tech community has a very small voice in State politics. Kinda reminds me of Horton trying to get everyone’s attention. Remember the Mayor of Who-ville? “Seriously, who is this? Is this Burt from accounting?”

As for donations to candidates, as you know Sharon, that’s a pretty slippery slope for lots of folks here in Idaho. Most techies would rather buy a new software license than write a check to a politician.

Personally, I’ve written a check to a number of candidates who I think could be advocates for technology in our State. Notably, I think Walt Minnick is going to be a great asset to the tech community and I’m co-chairing his corner cabinet here in Boise for his re-election run in 2010. He’ll be speaking at Idavation in May about his perspective on tech in Idaho. I hope everyone will come hear what he has to say…

In addition to capital you need people. Do we encourage the next generation to stay in Idaho for their college education? If not, are we truly vested in our educational system? I’ve watched two high-school graduating senior classes clamor for out of state schools. I see parents get deeply involved in making sure their kids get into the “right” school. Why can’t our Idaho schools be those “right” schools? It’s a bit of a chicken or egg dilemma. Will we do what it takes to improve our educational system when we each have a personal stake in its success, or will we only become truly committed after it improves?

Mark, I appreciate your insight in addressing things from a "let's change things from a top down approach". I also agree there is long-term value and return developing the educational environment into the factory of invention of innovative solutions our economy now does and will always need.

It has been my experience however, that innovation only really thrives when private business, higher education and local government support the inovative creativity and provides opportunity by sufficiently funding initiatives that allow long-term investments in knowledge and experience to mature.

The call to arms gap that seems to be most pressing exists in the space between innovation, and application. It calls for sustainable contribution and the ability for start-ups to develop solutions that can consistently deliver improved processes with technology that are sufficiently funded to allow long term investment in knowledge and experience to mature.

Keep carrying the banner to the legislators, and let small business work along side you to help promote the productive cooperation between business, government and education so our children and grandchildren have a future to look forward to.

Clearly you're a guy that's been involved in the creation of building a sustainable platform for technology companies to thrive. I only know you by reputation but it's this line of thinking that is required to get the stool to stand upright.

Here in Idaho, each of the legs need some work. From my perspective, small business hasn't developed the leadership yet, this group is still heads down trying to make their individual efforts succeed.

There's a great business led education group called the Idaho Business Coalition for Education Excellence (IBCEE) that is comprised of over 80 CEOs who are working hard on many facets of our education system.

Lastly, our lawmakers care greatly for this State and have demonstrated that they will act when presented with compelling data. It's up to us in the technology field to present them with that.

Thanks for joining the conversation and I look forward to meeting you one of these days.